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Comment by dvt | Hacker News Reader

Gambling games that require skill are in the objective minority (Blackjack, Poker, and sports betting); Roulette, Craps, War, Keno, Slots, Bingo, etc., are all purely luck-based.

NB: Even in skill-based games, the odds still always (and I mean always) favor the house. Taleb is right. If you play any game for an infinite amount of time at a casino, you will go bust.

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Even if the odds favor you on each event, if they are < 100% success and you play long enough, you will eventually lose everything. Gambler's Ruin always wins.

Just not true. Let's say I do a bet of 1 dollar, and I have 50% chance of winning, and I can make 1000 bets every day. If start with 100 dollars it is much more likely to die with a lot of money than broke.

@dragonwriter is right, because we're talking about infinities. There is some non-zero chance you'll flip a coin heads 10,000 times in a row. In an infinite amount of time, that series of events is guaranteed to happen at some point (Poincaré makes sure of that, although it might take billions or trillions of years).

You've defined a fair game [1], one which you're just as likely to win or lose, by the same amount each time. Clearly neither side of this game has an advantage over the other, for any given coin toss. But you expect that long term it will work in your favour?

[1] technically it's a martingale https://en.wikipedia.org/wiki/Martingale_(probability_theory...

This implies that both side of the transaction will inevitibly go bust, bookmaker and gambler alike. It may be true, but it's like saying we're all going to die at some point. The expected times are long enough that it's mostly not worth worrying about.

If the positive-expectation gambler can reduce his stakes he will find a comfortable expected time-to-ruin, which might be hundereds of years if he was able to quantify it. In this position, he should continue to place his bets.

We make hundreds of small positive-ER decisions like this every day and we don't shy away from them for fear of the black swan.

That’s not true at all. If you bet 100% of your bankroll then yes. But you’re not factoring in that you calculate what percentage of your bankroll to bet given certain odds.

If given 51% odds every time you will win considering you manage your bankroll well.

This is well known as “Kelly Criterion”

This also requires some assumptions: That there is no minimum stake and stakes are infinitely divisible. They're important assumptions because finding yourself near zero can easily happen on "full Kelly", especially if it's not a game of perfect information.

> NB: Even in skill-based games, the odds still always (and I mean always) favor the house.

In BlackJack, card counting can reveal plays where the odds favor the gambler. In sports betting, which can be though of as a market with high commissions, skilled players consistently make decisions with positive expectation.

True, but it's very hard to "get away" with card counting at a casin, after Ed Thorp popularized it. Taleb knows this too; he wrote the foreword for Dr. Thorp's memoir.

Also true in sports betting, but you aren't gaining an edge on the house so much as the other bettors. Assuming the house is intelligent they will make the market well enough to cover their risk.

My favorite example of them failing to do this is when Leicester City were Premier League champions two seasons ago [1].

[1] http://www.telegraph.co.uk/news/2016/05/02/leicester-city-wi...

A good point, in that the house is not necessarily in a nett negative-ER position due to the skilled gambler. In totalizator markets the house will always make x% of the pool. In fixed-price markets the house could face a negative position overall but that is mitigated by bet limits and a quick banhammer. For gambler who is +ER though, the house must be negative in respect to that single transaction.

It's a misconception that the house always makes money with respect to an individual customer, given enough time. I don't accuse you of this, I just mean generally. Let's take fixed markets. Overrounds of up to 25% are common, and if you back a prospect blindly you'll find that your -ER approaches that. But you're free to chose prospects and stakes in the same way Warren Buffet chooses stocks. With sufficient information and a high enough filter as Teleb calls it, you are free to pick off the bargains.

The information available to market participants is reflected in the price of prospects. Any one gambler may posess information others don't. It won't be perfect information, and most times the overround will absorb the difference, leaving the gambler with no option but to place a negative-ER bet or no bet at all. But when when the match is over and the waveform collapses and the fans have gone home and all prices are irrevocably shown to have been "wrong" to some degree, you can see that it's really an information game, not one based on luck, and from that it's unfair to say all players are eventually doomed.

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